SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended NOVEMBER 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17741
EPOLIN, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
New Jersey 22-2547226
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
358-364 Adams Street
Newark, New Jersey 07105
(Address of Principal Executive Offices)
(973) 465-9495
(Issuer's Telephone Number, Including Area Code)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes No X
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common, no par value per share: 11,611,555
outstanding as of December 1, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
EPOLIN, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended November 30, 1997
Item Page Herein
Item 1 - Financial Statements:
Introductory Comments 3
Balance Sheet 4
Statement of Income 6
Statement of Cash Flows 8
Item 2 - Management's Discussion and
Analysis or Plan of Operation 9
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
NOVEMBER 30, 1997
The financial information herein is unaudited. However, in the opinion
of management, such information reflects all normal and recurring adjustments
necessary for a fair presentation of the financial results for the periods
being reported. Additionally, it should be noted that the accompanying
financial statements do not purport to be complete disclosures in conformity
with generally accepted accounting principles.
The results of operations for the nine months ended November 30, 1997 are
not necessarily indicative of the results of operations for the full fiscal
year ending February 28, 1998.
These condensed statements should be read in conjunction with the
Company's audited financial statements for the fiscal year ended February 28,
1997.
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
BALANCE SHEET
(Unaudited)
ASSETS
NOVEMBER 30, 1997
Current assets:
Cash and cash equivalents $ 598,341
Accounts receivables 266,594
Inventories 301,840
Related party - Advances 4,056
Prepaid expenses:
Income taxes 10,145
Other 6,619
Employee loans 1,795
Deferred taxes 100,555
Total current assets 1,289,945
Property, plant and equipment - at cost:
Machinery and equipment 203,043
Furniture and fixtures 11,036
Leasehold improvements 432,037
Total 646,116
Less: Accumulated depreciation and
amortization 540,082
Net depreciated costs 106,034
Other assets:
Loan receivable -related party 70,198
Deferred taxes 199,493
Security deposits 37,070
Cash value - life insurance policy 23,902
Total other assets 330,663
Total $ 1,726,642
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
BALANCE SHEET (CONTINUED)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
NOVEMBER 30, 1997
Current liabilities:
Accounts payable 22,851
Accrued expenses 31,886
Total current liabilities 54,737
Deferred compensation 73,053
Total liabilities 127,790
Stockholders' equity:
Preferred stock, $2.50 par value: 940,000
shares authorized; none issued
Series A convertible non-cumulative preferred
stock, $15.513 par value: redemption price
and liquidation preference: 60,000 shares
authorized: 5,478 shares issued and redeemed
Common stock, no par value; 20,000,000 shares
authorized: 11,654,000 shares issued and
outstanding at 1997 and 1996 2,206,984
Common stock unissued 10,000
Paid-in capital 6,486
Accumulated deficit (624,618)
Total 1,598,852
Less: treasury stock -
Total stockholders' equity 1,598,852
Total $ 1,726,642
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
STATEMENT OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NOVEMBER 30, 1997
Sales $486,083
Cost of expenses:
Cost of sales 120,598
Selling, general and
administrative expenses 180,898
Total 301,496
Operating income 184,587
Other income - interest 4,590
Net income $189,177
Per share data:
Net income per common share $ -
Weighted average number of
shares of common outstanding 11,611,555
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
STATEMENT OF INCOME
(UNAUDITED)
NINE MONTHS ENDED NOVEMBER 30, 1997
Sales $ 1,233,301
Cost of expenses:
Cost of sales 378,530
Selling, general and
administrative expenses 575,941
Total 954,471
Operating income 278,830
Other income - Interest 9,679
Net income $288,509
Per share data:
Net income per common share $ 0.02
Weighted average number of
shares of common outstanding 11,611,555
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED NOVEMBER 30, 1997
Cash flows from operating activities:
Net income $288,509
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 44,487
Changes in assets and liabilities:
Accounts receivable (40,070)
Inventories 39,848
Advances and loans 16,041
Prepaid expenses 8,145
Employee loans (1,795)
Accounts payable 4,127
Accrued expenses (1,328)
Taxes payable - payroll (6,347)
Net cash provided by operating activities: 351,617
Cash flows from investing activities:
Related party loan 1,306
Payments for equipment - net (7,385)
Net cash used by investing activities (6,079)
Increase in cash 345,538
Cash and cash equivalents:
Beginning 252,803
Ending 598,341
Supplement Disclosure of Cash Flow Information:
Income taxes paid $14,300
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion should be read in conjunction with the
Financial Statements and Notes thereto included in this report and is
qualified in its entirety by the foregoing.
Overview
Epolin, Inc. (the "Company") is a manufacturing and research and
development company which was incorporated in the State of New Jersey in
May 1984. The Company is principally engaged in the development,
production and sale of near infrared dyes to the optical industry for laser
protection and for welding applications and other dyes, specialty chemical
products that serve as intermediates and additives used in the adhesive,
plastic, aerospace, pharmaceutical, flavors and fragrance industries to a
group of customers primarily in the United States, Europe, Australia and
the Far East.
Results of Operations
Sales for the three months ended November 30, 1997 were approximately
$486,000 while operating income was approximately $185,000. For the nine
months ended November 30, 1997, the Company had sales of approximately
$1,233,000 and operating income of approximately $279,000. For the entire
fiscal year ended February 28, 1997, the Company reported sales of
approximately $1,414,000 and operating income of approximately $297,000.
Cost of sales for the three months ended November 30, 1997 was
approximately $121,000 and the Company's selling, general and
administrative expenses for the three months ended November 30, 1997 were
approximately $181,000. For the nine months ended November 30, 1997, cost
of sales was approximately $379,000 and the Company's selling, general and
administrative expenses were approximately $576,000.
During the three and nine months ended November 30, 1997, the Company
realized approximately $4,600 and $9,700, respectively, in interest income.
Net income was approximately $189,000 for the three months ended November
30, 1997 and approximately $289,000 for the nine months ended November 30,
1997.
Liquidity and Capital Resources
As of November 30, 1997, the Company had working capital of
approximately $1,235,000 as compared to working capital of approximately
$908,000 as of February 28, 1997, an increase of approximately $327,000.
The Company's equity to debt ratio was approximately 12.5 to 1 as of
November 30, 1997 as compared to an equity to debt ratio of 16.7 to 1 as of
February 28, 1997. Stockholders' equity as of November 30, 1997 was
approximately $1,599,000 as compared to stockholders' equity of
approximately $1,360,000 as of February 28, 1997. As of November 30, 1997,
the Company had approximately $598,000 in cash and cash equivalents, total
assets of approximately $1,727,000 and total liabilities of approximately
$128,000, as compared to $253,000 in cash and cash equivalents, total
assets of approximately $1,440,000 and total liabilities of approximately
$81,000 as of February 28, 1997. The Company believes that its available
cash, cash flow from operations and projected revenues will be sufficient
to fund the Company's operations for at least the next 12 months.
The Company does not anticipate making any significant additional
capital expenditures in the immediate future as it believes its present
machinery and equipment will be sufficient to meet its near term needs.
Inflation has not significantly impacted the Company's operations.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
There are no exhibits applicable to this Form 10-QSB.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during
the fiscal quarter ended November 30, 1997.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.
EPOLIN, INC.
(Registrant)
Dated: December 22, 1997 By: /s/Murray S. Cohen
Murray S. Cohen,
Chief Executive Officer
Dated: December 22, 1997 By: /s/Murray S. Cohen
Murray S. Cohen,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
EPOLIN, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED NOVEMBER 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> NOV-30-1997
<CASH> 598,341
<SECURITIES> 0
<RECEIVABLES> 266,594
<ALLOWANCES> 0
<INVENTORY> 301,840
<CURRENT-ASSETS> 1,289,945
<PP&E> 646,116
<DEPRECIATION> 540,082
<TOTAL-ASSETS> 1,726,642
<CURRENT-LIABILITIES> 54,737
<BONDS> 0
<COMMON> 2,206,984
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,726,642
<SALES> 1,233,301
<TOTAL-REVENUES> 1,233,301
<CGS> 378,530
<TOTAL-COSTS> 378,530
<OTHER-EXPENSES> 575,941
<LOSS-PROVISION> 0
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<EPS-PRIMARY> .02
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</TABLE>
